2025 (6) TMI 1597 - AT - Service Tax

Rejection of Swachh Bharat Cess (SBC) rebate - export of services or not - applicability of N/N. 39/2012-ST - issue of limitation stated as unexamined - classification of services as intermediary required examination or not - Credit eligibility required further verification or not. Applicability of N/N. 39/2012-ST - HELD THAT - The learned Commissioner (Appeals) has remanded the matter without considering the fact that the Order-in- Original had already established compliance with the conditions under Notification No. 39/2012-ST including export of services payment of duty/tax and non-availment of CENVAT Credit. It is also found that the original authority had examined this issue on the basis of documentary evidence but despite that the learned Commissioner (Appeals) ignored the findings of the original authority and still remanded the matter without justification. The Tribunal in the appellant s own case TECNOVATE ESOLUTIONS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE DELHI 2018 (8) TMI 695 - CESTAT NEW DELHI has conclusively held that the appellant exports Business Support Services and Business Auxiliary Services as a BPO. Entitlement of the appellant to the rebate of SBC - HELD THAT - This issue is already settled by the Hon ble Delhi High Court in the case of ExxonMobil Services and Technology Pvt Ltd vs. Union of India 2024 (12) TMI 941 - DELHI HIGH COURT wherein it has been categorically held that Swachh Bharat Cess is not a part of Cenvat Credit under the Cenvat Credit Rules. Further the original authority had itself noted that no Cenvat Credit was availed on inputs and input services on which the rebate was claimed specifically in respect of the Swachh Bharat Cess component. Therefore the denial of rebate on SBC is not sustainable in law. Compliance with condition 2(e) of the Notification No. 39/2012-ST dated 20.06.2012 - HELD THAT - The appellant has not claimed any rebate on SBC component of Cenvat and the condition stands satisfied. Denial of rebate on the ground of nexus - HELD THAT - The input services involved in the present case have been used in exporting the services under Rule 6A(2) of the Service Tax Rules 1994 and in various decisions it has been consistently held that if the Cenvat Credit has not been questioned at the time of availing then it cannot be questioned at the time of refund. Time limitation - HELD THAT - For the period February 2016 to March 2016 the rebate was filed on 02.02.2017 which is well within the limitation period as held in the case of CCE vs. Span Infotech India Pvt Ltd 2018 (2) TMI 946 - CESTAT BANGALORE - LB wherein it has been clarified that for export of services the relevant date is the end of the quarter in which FIRC is received. Intermediary services - HELD THAT - The Tribunal in the appellant s own case for the earlier period in TECNOVATE ESOLUTIONS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE DELHI 2018 (8) TMI 695 - CESTAT NEW DELHI which was decided in appellant s favour has held that the appellant had provided export of service. Moreover the original authority clearly held that the appellant s services fall under the category of Business Auxiliary Services and Business Support Services and do not fall under the category of intermediary services . Conclusion - i) Swachh Bharat Cess is not a part of Cenvat Credit under the Cenvat Credit Rules. ii) If the Cenvat Credit has not been questioned at the time of availing then it cannot be questioned at the time of refund. iii) For export of services the relevant date for limitation is the end of the quarter in which FIRC is received. iv) The appellant s services fall under the category of Business Auxiliary Services and Business Support Services and do not fall under the category of intermediary services . The impugned order remanding the matter to the original authority is not sustainable in law - Appeal allowed.

The core legal questions considered in this appeal include:

(1) Whether the adjudicating authority correctly applied Notification No. 39/2012-ST regarding eligibility for rebate of Swachh Bharat Cess (SBC) paid on input services used in export of services;

(2) Whether the claims for rebate filed by the appellant were within the prescribed limitation period;

(3) Whether the appellant's services fall within the category of "intermediary services" or qualify as Business Auxiliary Services/Business Support Services eligible for rebate;

(4) Whether the appellant complied with condition 2(e) of Notification No. 39/2012-ST, particularly regarding non-availment of Cenvat Credit on inputs/input services for which rebate is claimed;

(5) Whether the Commissioner (Appeals) was justified in remanding the matter to the adjudicating authority for re-examination of these issues;

(6) Whether the department was entitled to raise new grounds of appeal that were not part of the original proceedings;

(7) The legal effect of prior judicial precedents and orders binding on the authorities in relation to the appellant's service classification and rebate claims.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 39/2012-ST and Eligibility for Rebate of SBC

The relevant legal framework comprises Notification No. 39/2012-ST dated 20.06.2012 (as amended), which provides for rebate of Swachh Bharat Cess paid on input services used in export of output services, subject to conditions including non-availment of Cenvat Credit on such inputs.

The adjudicating authority had examined documentary evidence and found that the appellant complied with the conditions of the Notification, including export of services, payment of duty/tax, and non-availment of Cenvat Credit on the input services for which rebate was claimed. This was supported by prior Tribunal rulings affirming the appellant's export of Business Auxiliary and Business Support Services as a BPO.

Despite these findings, the Commissioner (Appeals) remanded the matter for re-examination, alleging that the original order did not consider the applicability of the Notification. The appellant contended this was erroneous and ignored settled facts and law.

The Tribunal emphasized that the original authority had indeed examined and recorded findings on these issues, supported by documentary evidence, and that the remand was therefore unjustified.

2. Limitation Period for Filing Rebate Claims

The department challenged the rebate claims for the period February 2016 to March 2016 as time-barred. The relevant legal provision is Section 118 of the Central Excise Act, 1944, which prescribes limitation periods for refund claims.

The appellant submitted that the claims were filed on 02.02.2017, within the limitation period, relying on the Tribunal's Larger Bench decision in a precedent case which clarified that the limitation period begins from the end of the quarter to which the refund pertains, and for export of services, the relevant date is the quarter-end in which the Foreign Inward Remittance Certificate (FIRC) is received.

The Commissioner (Appeals) had remanded the matter citing non-examination of limitation, but the Tribunal found that the original order had considered and confirmed timely filing of claims, rendering the remand unsustainable.

3. Classification of Services: Intermediary vs. Business Auxiliary/Support Services

The department contended that the appellant's services were intermediary services, which would affect rebate eligibility. The appellant relied on prior Tribunal orders and judicial precedents holding that their services constitute Business Auxiliary and Business Support Services, not intermediary services.

The original adjudicating authority had recognized the appellant's services as non-intermediary, consistent with the CBEC Education Guide (2012) which clarifies that call centres providing services on their own account are not intermediaries.

The Commissioner (Appeals) remanded the matter for re-examination of this classification, but the Tribunal noted that this issue was conclusively decided in the appellant's favour in earlier appeals, and remanding it violated judicial discipline and binding precedents.

4. Compliance with Condition 2(e) of Notification No. 39/2012-ST Regarding Cenvat Credit

Condition 2(e) prohibits rebate claims on inputs/input services for which Cenvat Credit has been availed. The appellant asserted full compliance, stating no Cenvat Credit was claimed on the SBC component, supported by documentary evidence.

The appellant also relied on the recent Delhi High Court ruling which held that Swachh Bharat Cess is not part of Cenvat Credit under the Cenvat Credit Rules, 2004, thereby entitling them to rebate on SBC even if Cenvat Credit was availed on other components.

The Commissioner (Appeals) had questioned credit eligibility, but the Tribunal found that the original authority had properly examined this and that the denial of rebate on SBC was unsustainable.

5. Treatment of Department's Appeal Raising New Grounds

The department raised new grounds in its appeal that were not part of the original show cause notice or deficiency memos. The appellant contended that the department cannot improve its case at the appellate stage by introducing new allegations.

The Tribunal relied on binding Supreme Court precedents holding that issues not raised in the original proceedings cannot be entertained later by the Revenue. The Commissioner (Appeals) erred in remanding the matter instead of rejecting the department's appeal on this basis.

6. Binding Effect of Prior Judicial Precedents and Orders

The appellant relied on prior Tribunal and appellate orders conclusively holding the nature of their services and rebate eligibility. The Tribunal reiterated the principle that lower authorities must follow binding orders unless stayed or overruled by a higher court.

The Commissioner (Appeals) ignored these binding precedents and remanded settled issues, which the Tribunal found to be a violation of judicial discipline and thus unsustainable.

7. Nexus Between Input Services and Exported Output Services

The appellant claimed rebate on various input services such as air travel agent services, event management, catering, rent-a-cab, and miscellaneous services. The original authority had accepted the nexus between these input services and the exported output services, supported by prior orders.

The Commissioner (Appeals) remanded the matter without providing specific findings for each denied service. The Tribunal found this lack of reasoning contrary to settled principles requiring reasoned decisions and held that the nexus was satisfactorily established.

Conclusions on Issues:

The Tribunal concluded that the impugned order remanding the matter was not sustainable in law. The original adjudicating authority had duly considered and recorded findings on all core issues, including applicability of the Notification, limitation, classification of services, compliance with Cenvat Credit conditions, and nexus of input services.

The department's attempt to raise new grounds at the appellate stage was impermissible. The Commissioner (Appeals) failed to engage with the merits and binding precedents, resulting in an arbitrary and unjustified remand.

The Tribunal set aside the impugned order and allowed the appellant's appeal with consequential relief as per law.

Significant Holdings:

"We find that the learned Commissioner (Appeals) has remanded the matter without considering the fact that the Order-in-Original had already established compliance with the conditions under Notification No. 39/2012-ST, including export of services, payment of duty/tax, and non-availment of CENVAT Credit."

"The Tribunal in the appellant's own cases... has conclusively held that the appellant exports Business Support Services and Business Auxiliary Services as a BPO. Despite that, the learned Commissioner (Appeals) has questioned the nature of services, violating judicial discipline."

"It is a settled law that an issue which is not involved in the show cause notice, the same cannot be raised later by the Revenue."

"Swachh Bharat Cess is not a part of Cenvat Credit under the Cenvat Credit Rules."

"If the Cenvat Credit has not been questioned at the time of availing, then it cannot be questioned at the time of refund."

"For export of services, the relevant date for limitation is the end of the quarter in which FIRC is received."

"The appellant's services fall under the category of Business Auxiliary Services and Business Support Services and do not fall under the category of 'intermediary services'."

"The impugned order, remanding the matter to the original authority, is not sustainable in law; therefore, we set aside the same and allow the appeal of the appellant with consequential relief, if any, as per law."

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